Huanhe, officially launched in early August by Tencent, will no longer be releasing new NFTs to users on Tuesday, according to the Shenzhen-based company. However, owners of existing collectibles can keep, display, or request a refund for their items, according to the company.
“Huanhe is making business adjustments based on the company’s consideration to focus on its core strategy,” Tencent said in a statement.
Huanhe is one of China’s largest NFT platforms, with new collectibles frequently selling out immediately upon release.
Tencent has taken a significant step back from the NFT market, which has come under increased scrutiny from Chinese regulators. Digital collectibles in the form of NFTs have grown in popularity in recent years, thanks in large part to an active, if not highly speculative, secondary market.
After state media repeatedly raised concerns about NFT speculation in the country, tech behemoths such as Tencent and Ant Group agreed in June to halt secondary trading of digital collectibles and “self-regulate” their market activities.
China regulations interfering in the crypto industry
Recently, the policy environment in China has not been particularly relaxed in terms of digital collections. The National Internet Finance Association of China, the China Banking Association, and the Securities Association of China issued the “Initiative on Preventing NFT-Related Financial Risks” in April of this year, which included not providing centralized transactions for NFT transactions and setting up disguised trading places in violation of regulations.
Tencent’s WeChat platform specification clearly stated on June 20 that its digital collectibles business and virtual currency belong to the same category of illegal business behavior, and that the public account providing digital collectibles secondary trading service may be blocked.